Norton Rose Advises on £480,000,000 Pension Liability Restructuring

Thursday, March 31, 2011
Tags:  Norton Rose Fulbright
International legal practice Norton Rose LLP has assisted Capita Trust Company Limited (Capita) in connection with the innovative restructuring of the pension liabilities of Uniq Plc (Uniq), the first pension deficit for equity swap of a listed company to take place in the UK with this structure.

The restructuring will be carried out by means of a scheme of arrangement and a regulated apportionment arrangement to facilitate the transfer of pension liabilities, in excess of £480,000,000, to a special purpose vehicle (NewCo), incorporated and ultimately managed by Capita. Following the restructuring, Newco will be interested in 90.2% of the share capital of Uniq.
The terms of the regulated apportionment arrangement were negotiated and agreed by all stakeholders including Uniq Pension Scheme Trustees Limited (Pension Scheme Trustee), the Pensions Regulator (tPR) and the Board of the Pension Protection Fund (PPF). The restructuring involved an application to the tPR and subsequent granting by the tPR of formal clearance, for the benefit of NewCo and Capita, from the “moral hazard” powers of the tPR. It also involved a rule 9 waiver being granted under the Takeover Code.
As a result of the restructuring, Uniq will be delisted and transferred to AIM and the administrator of NewCo (on behalf of the Pension Scheme Trustee) will eventually sell NewCo’s interest in the (90.2%) share capital of Uniq to outside investors.
Norton Rose LLP also advised Newco and Capita in connection with the tax, employment, insolvency, directors’ liability, directors’ responsibility, publicity and corporate administration risks associated with this restructuring.
Farmida Bi, partner at Norton Rose, comments:
“Pensions liabilities have become a major issue for many UK employers in recent years. This deal is a successful example of one company dealing with that issue in a way that benefits both the underlying business and the pension scheme itself. Transferring the liabilities to an SPV in this way ensures Uniq can continue to grow as a company, and the policy holders of the pension scheme can enjoy a greater degree of security.”
The Norton Rose LLP team was led by Farmida Bi (Banking), assisted by Philip Jelley (Pensions), James Stonebridge (Insolvency), Sarah McKellar (Corporate), Stephen Rigby (Corporate), Judy Harrison (Tax), Matt Hodkin (Tax), Esha Dasgupta (Employment), Simon Thompson (Banking) and Mary Whitley (Banking).
The Norton Rose LLP team worked alongside Slaughter and May as adviser to the Uniq group, Linklaters as adviser to the Pension Scheme Trustee and Stephenson Harwood as adviser to the PPF.